Residential vs Commercial Property
The manner in which properties are taxed depends upon the type of properties they are classified to be. The two main types of property taxes are residential and commercial, and there are distinct differences between the two that influence the way they’re taxed and how much they pay in taxes.
The first, and perhaps the largest, difference between residential and commercial property taxes lies within the definition of what is defined as residential and commercial property. Basically, residential property is any property that is used for residential purposes, such as single-family homes and other such dwellings. Commercial property, on the other hand, is property that was obtained for commercial purposes and is used to generate revenue. Apartment buildings, condos, manufacturing sites and even farmlands are all examples of what classifies as commercial property.
2. Disproportionate Rates
Another one of the most significant differences between commercial and residential properties is the rates at which they are taxed. Commercial properties tend to be taxed at much higher rates than residential ones. There are various reasons for this, some of which is because of politics and the lure of lower property taxes for homeowners can sometimes help running officials garner votes. Additionally, there is much more residential property across the nation than there is commercial property, so some feel that commercial properties should be charged more because of this. Additionally, because commercial property generates income, some advocate that owners of such property should have to fund more of the governments tax bill. Regardless of the reason, there is a distinct difference in the amount of taxes that commercial and residential property owners pay.
3. Different Valuation Strategies
Of course, the way that the property is valued for tax purposes is much different for commercial property than it is for residential property as well. For instance, whereas residential property is usually simply based on an estimate of the value of the property in question, commercial property is usually calculated based on the total income generating capacity of the property at its “highest and best” possible use. That figure is taken into consideration along with its relation to the actual income that is being derived from the property at the time of the assessment. As you can see, many of these values are subjective matters for which there is no set formula to discern. Therefore, many commercial property owners feel that their equipment and other property is overassessed at higher values that it should have been in order to make them have to pay more in property taxes than they should have to.
Regardless of whether you have to pay residential or commercial property taxes, or both, Assessment Technologies can assist you with getting your property taxes at the best rates possible. Property tax assessors are human too, which means that they are subject to mistakes and errors as well. If you feel that your property was assessed higher than it should have been, Assessment Technologies experts can assist you in determining whether that is the case and, if so, how to prove it. Assessment Technologies’ experts utilize a unique valuation method to ensure that you never pay more for your residential or commercial property taxes than you have to.